I am happy to welcome you to the Mini Roundtable Meeting on Agricultural Marketing and Food Security in Asia and the Pacific. The main objective of the meeting is to seek your views on FAO’s programme of work in the area of agricultural marketing. The aim of this programme of work is to help member countries build their capacity to face the challenges of the new emerging international economic environment and gain from the opportunities available in that environment.
Despite unprecedented rates of economic growth, food insecurity remains a major challenge for several countries of this region. Although the output of foodgrains and other agricultural commodities in many of these predominantly agricultural countries recorded impressive gains, the incomes of small and marginal farmers failed to improve to desired levels. Rural poverty and food insecurity at household level remain pronounced, despite pervasive government interventions in agricultural markets. Apart from these internal challenges, the countries of the region face challenges from the rapid changes in the international trade and economic environment. Economies are now more interdependent, and a recession or boom in one country can affect others, sometimes profoundly. The Agreement on Agriculture (AoA) under the World Trade Organization (WTO) entails the reduction of agricultural subsidies, the increase in access of other countries to domestic markets, the reduction of import tariffs, the dismantling of non-tariff barriers, and meeting the stringent sanitary and phytosanitary conditions on traded goods. These challenges can be converted to opportunities only if domestic agricultural marketing systems are liberalized and geared to the changing national and international environments.
In response to these challenges, the governments in most of the countries of the region have embarked on programmes of liberalization of their domestic markets and economies. As a part of these programmes, financial, manufacturing and infrastructure sectors have been liberalized to a great extent. Foreign direct investment in various sectors is being encouraged. External trade regimes have been liberalized too to a large extent. Even within the agricultural sector there has been considerable liberalization in almost all countries, although it has, by and large, lagged behind other sectors of the economy. Liberalization of the agricultural sector essentially implies liberalization of markets for agricultural products and inputs, and improvement in the efficiency and functioning of these markets.
As you are aware, governments in most of the Asian countries have been intervening in agricultural markets for some time now. These interventions have included the creation of marketing infrastructure through public investment and incentives, regulation of the practices of the market players with the help of several legal instruments, output price support to the farmers, supply of critical farm inputs at subsidized prices, direct entry into the markets by way of purchases and sales of agricultural commodities by government agencies, and encouragement to farmers cooperatives to increase the bargaining power of their members. However, there have been considerable differences in the nature of the policy instruments used by countries, and in the relative emphasis given to various aspects of marketing system improvement. In this context, there are quite a few lessons that each country can learn from the experiences of others. Thus there is a need to document these experiences.
The marketing system, which affects the prices received by the farmers and those paid by the consumers, has a profound impact on food security, particularly in augmenting the amount of food available and improving the physical and economic access of the masses to it. In predominantly small farm agriculture, the marketing system is required to assemble the small surpluses of farmers. Further, with the increasing trend towards specialized production according to the comparative advantage of various regions, the demand for marketing services is increasing rapidly. The marketing system should respond to the situation and meet the demand for marketing services at the lowest possible cost. Urbanization is increasing at a rapid rate in almost all of the countries of this region. The urban areas provide an assured market for a variety of farm products. One of the important challenges that the agricultural marketing system faces today is to meet the demand for the kind of services needed in the urban areas such as packaging, processing and ready-to-cook and ready-to-eat foods. Seasonality in production and inter-locking of credit and product markets continue to pose another challenge for the agricultural marketing system. Because of a lack of adequate marketing infrastructure for performing various marketing functions, physical losses in the marketing chain continue to be large. However, the creation of infrastructure requires a huge investment and the governments in several countries do not have adequate financial resources to meet the investment requirements at the desired scale. The private sector can be attracted to invest in marketing infrastructure only if the government creates an enabling environment.
With the increasing trend towards globalization, several countries have become either exporters or importers of agricultural commodities. For the benefits of this development to trickle down to small farmers, land labourers and other rural households, considerable initiatives in the area of marketing development and domestic market reforms are called for. But there is lot of resistance to reforms in the domestic markets for agricultural commodities. The big bang approach to reforms might not be the right strategy in all countries. In this context, the choice of speed and the sequencing of domestic agricultural market reforms pose a formidable challenge to policy makers.
The governments in the Asian countries have launched a series of market improvement schemes to support farmers as well as consumers, but the scale of such schemes has remained limited and in quite a few cases their implementation has been tardy. As a consequence, the intended benefits have not been realized. Another important aspect that needs consideration is the policy of buffer stocking of foodgrains that is being pursued by different countries independently. A collaborative approach can help to reduce the cost of carrying such stocks without ignoring national food security concerns.
Priorities in agricultural marketing in developing countries of Asia and the Pacific must be guided by the objective of reducing food insecurity and poverty at a rapid rate and, to a great extent, will depend on the accelerated growth of Asian agriculture and the increase in rural non-farm sector employment. The marketing system is capable of helping in both of these areas. You may recall that the first World Food Summit (WFS), held in 1996, set a goal of reducing by half the number of undernourished by the year 2015. However, it has now become clear that the goal set by the first WFS will not be met without renewed efforts or new initiatives.
In this connection, government interventions in agricultural marketing cannot be made a scapegoat for continued poverty and food insecurity. Experience shows that all interventions are not bad. Indeed, some interventions will be essential as long as there are tiny and small farms and the landless poor in Asia. However, the emphasis of government initiatives should shift from direct entry into the markets to the provision of cost-reducing technological options in production and marketing, support for institutional mechanisms to reduce farmers’ yield and price risks, the creation and promotion of marketing infrastructure, promotion of group marketing by farmers, encouragement to value-addition and processing facilities, establishment of adequate safety nets for the poor, collection and dissemination of market information, encouragement to undertake grading and packaging at the farm level, maintenance of quality standards, training of farmers in marketing activities, and promotion of research and studies relating to the marketing system and increases in its efficiency. And it must be recognized that the private sector also faces the tremendous challenge of taking over several marketing functions that hitherto have been performed by the public sector.
FAO’s medium term plan for 2002-07 includes several initiatives for reducing poverty and food insecurity, and under its programme relating to agricultural support systems there are several technical projects that have a direct as well as an indirect relationship with the agricultural marketing system. Indeed, a major concern of FAO is to help the member countries reduce poverty and food insecurity by improving the efficiency of their marketing systems. This may require redefining the role of public institutions and encouraging greater participation of the private sector in agricultural marketing. I hope for your considered advice on the priority areas suggested in the theme paper that was distributed to you before the meeting. These priority areas include (a) maintenance of a cross-country information network on the key policy instruments being used by various countries; (b) support and capacity building for human resource development, including training and research in agricultural marketing and agribusiness; (c) support in the areas of reduction in farmers’ risks, assessment and development of marketing technologies, planning for and investment in a hierarchy of agricultural markets, mobilization of investment in agricultural marketing infrastructure, development of alternative marketing channels with greater participation of the private sector, and provision of safety nets for the vulnerable groups; and (d) a collaborative approach to the buffer stocking of foodgrains.
I hope, with your active participation in the Roundtable Meeting, we will be able to prepare a plan of activities and initiatives for the FAO Regional Office for Asia and the Pacific (RAP) in this important area of agricultural marketing and make a significant contribution by helping the member countries of this region to reduce food insecurity and poverty at a rapid rate. I wish you successful deliberations and I look forward to receiving your suggestions.
R. B. Singh
Assistant Director General and Regional
Representative
FAO Regional Office for Asia and the Pacific
